Labour will lose in 2020 if it doesn't fix house affordability: analyst

The Labour-led government risks electoral defeat in 2020 unless it makes demonstrable progress on affordable housing this year, says the outspoken author of an annual survey of global housing affordability.

Hugh Pavletich, the Christchurch-based co-author of the Demographia International Housing Affordability Survey, says in his introduction that the results of the 2019 survey "will come as a shock" to New Zealand's Labour-led government.

Billed as "the world's largest known collection of housing affordability data at the housing market level", the 2019 survey is the 15th in the series. It concentrates on what it calls 'middle-income housing affordability' rather than subsidised housing for low-income households and measures median house prices by median annual gross pre-tax household income.

On that basis, it finds Hong Kong has the world's most unaffordable housing, with a ratio of median house price to median household income of 20.9 times. New Zealand is ranked second at nine times in 'major housing markets', although this drops to 6.5 times when measured across all housing markets in New Zealand. The major markets unaffordability in New Zealand is driven particularly by Auckland and Tauranga, ranked the eighth and ninth least affordable cities, with ratios of 9.1 and 9.0 respectively. The survey covers 309 cities in the English-speaking world plus Singapore and Hong Kong,

Sydney at 11.7 times and Melbourne at 9.7 times rank as the third and fourth least affordable, while Hong Kong and Vancouver top the list. Palmerston North ranks as New Zealand's most affordable city, with a median price to household income ratio of 5.0.

The most affordable housing markets are all in the US and Canada, although Los Angeles, Miami and New York all rank as 'severely unaffordable' markets.

The Demographia commentary acknowledges that the New Zealand and Singaporean governments are the only two of those surveyed that are actively prioritising affordable housing, although Pavletich told Radio New Zealand the government's KiwiBuild target for affordable homes in Auckland at $650,000 was "an insult" to people's intelligence.

"Put simply, if this government fails to perform with housing issues in 2019, it will deservedly be thrown out at the next general election, late 2020," he said in his commentary for the report.

Known for a constant stream of fiery rhetorical commentary on New Zealand housing issues, Pavleteich says "the New Zealand public and media will not tolerate political and institutional failure - something the previous government was taught at the 2017 election".

Housing Minister Phil Twyford has so far not commented on the report, the credibility of which has been boosted in the past by then Finance Minister Bill English penning the introduction for the ninth report in 2013.

Twyford's flagship KiwiBuild policy suffered another blow last Friday with the resignation of its chief executive, Stephen Barclay, who has been embroiled in an employment dispute and had not been at work since November after taking the helm for the new policy in May last year.

Pavletich argues the primary cause of housing unaffordability is the unavailability of urban land for development.

Act party leader David Seymour said in a statement that the Labour-led administration now "owned" what had previously been the National Party's housing affordability problem. National's leader Simon Bridges told RNZ's 'Morning Report' programme that his party's reforms of the Resource Management Act had been too "timid" and that a National-led government would make sweeping changes to make planning law less time-consuming and costly.